Is Furor Over Executive Pay Just Linked to Stock Price?

By

Paul Glader

Oct 6, 2009 12:06 pm ET

A questioner said Bill Conaty hasn’t “blown the whistle on Fat Cat salaries” and asked if we are paying executives too much.

Mr. Conaty, a former top executive at GE himself, demurred. “The volume and noise level on fat cat salaries, I find, directly proportional to the stock price.” He says shareholders become more vocal about executive pay during a downturn. He suggested that CEO pay should be connected more to incentives.

While it may be true that shareholders make more noise when CEOs take raises while a stock is underperforming, it does seem that executive pay is an ongoing concern for shareholders, employees and regulators.

Shareholders tend to launch resolutions in proxies and at annual meetings every year — in good times and in bad — for many large, publicly-traded companies. The business press has taken notice in recent years and most business publications, including the Journal, run special sections online and in print dedicated to analyzing executive pay. Polls show that most Americans think CEOs are overpaid. On this point, we wonder if Mr. Conaty is behind the curve?